Green to Gold Green to Gold How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage Daniel C Esty and Andrew S Winston Yale University Press New Haven and London Copyright ᭧ 2006 by Daniel C Esty and Andrew S Winston All rights reserved This book may not be reproduced, in whole or in part, including illustrations, in any form (beyond that copying permitted by Sections 107 and 108 of the U.S Copyright Law and except by reviewers for the public press), without written permission from the publishers Set in Adobe Garamond with Stone Sans Display by Westchester Book Services Printed in the United States of America Library of Congress Cataloging-in-Publication Data Esty, Daniel C Green to gold : how smart companies use environmental strategy to innovate, create value, and build competitive advantage / Daniel C Esty and Andrew S Winston p cm Includes bibliographical references and index ISBN–13: 978–0–300–11997–8 (cloth : alk paper) ISBN–10: 0–300–11997–6 (cloth : alk paper) Industrial management—Environmental aspects Corporations— Environmental aspects Business enterprises—Environmental aspects I Winston, Andrew S II Title HD30.255.E88 2006 658.4'083—dc22 2006022012 A catalogue record for this book is available from the British Library This book was printed with soy-based ink on acid-free recycled paper that contains 100% postconsumer fiber The case was manufactured using acid-free recycled paper that contains postconsumer pulps The carbon dioxide emissions associated with the publication and distribution of this book have been offset by the purchase of carbon credits 15 14 13 12 11 10 Acknowledgments We were granted remarkable access to top officials in dozens of companies We are profoundly grateful for the many hours environmental professionals, factory managers, division heads, Board Members, COOs, and CEOs spent with us We also interviewed people working closely with industry at major environmental groups In total, we spoke to more than 300 people at more than 100 companies We can’t thank individually all the executives who shared with us their environmental challenges and triumphs with impressive candor and humor But we want to single out a few people who really went beyond the call of duty and cleared a path for us They arranged extensive company visits for us, gave us access to all levels of the company, ensured that we got into “the trenches,” and often sat through multiple days of meetings listening to stories they knew already In this regard, we thank Keith Miller and Kathy Reed at 3M, Shaye Hokinson at AMD, Chris Mottershead at BP, Pat Nathan at Dell, Dawn Rittenhouse and Paul Tebo at DuPont, ix For our children—Sarah, Thomas, and Jonathan (the Estys), and Joshua and Jacob (the Winstons) We hope you will be the beneficiaries of a future where businesses both profit and help to create a healthy and sustainable world v Contents Acknowledgments, ix Preface, xiii Introduction: The Environmental Lens, Part One Preparing for a New World Eco-Advantage, Issues and opportunities for business in an environmentally sensitive world Natural Drivers of the Green Wave, 30 Environmental problems and how they shape markets Who’s Behind the Green Wave? 65 Stakeholders and the power they wield Part Two Strategies for Building Eco-Advantage Managing the Downside, 105 Green-to-Gold Plays to reduce cost and risk viii Contents Building the Upside, 122 Green-to-Gold Plays to drive revenues and create intangible value Part Three What WaveRiders Do The Eco-Advantage Mindset, 145 Looking through an environmental lens Eco-Tracking, 166 Understanding your company’s environmental “footprint” Redesigning Your World, 195 Designing for the environment and “greening” the supply chain Inspiring an Eco-Advantage Culture, 206 Creating an organizational focus on environmental stewardship Part Four Putting It All Together 10 Why Environmental Initiatives Fail, 237 Pitfalls to avoid on the way to Eco-Advantage 11 Taking Action, 262 Execution for sustained competitive advantage 12 Eco-Advantage Strategy, 283 Key Eco-Advantage plays, tools, and plans Appendix 1: Additional Resources, 307 Appendix 2: Methodological Overview, 311 Appendix 3: Most Relevant Tools for Each Green-to-Gold Play, 317 Notes,* 321 Index, 349 * References are not noted in the text but are shown by page number and key words beginning after the appendices 352 Index Columbia University Earth Institute, 178 command and control, 75, 81, 188 communications: external, 208, 225–29, 271, 273–74, 282; internal, 208, 229–30, 271, 274–75, 282 competitive advantage, 3–4, 6, 11, 14, 22, 28, 56, 101–3, 143, 146, 197, 252, 283–86, 297 See also Eco-Advantage competitiveness, 26, 101, 200 compliance, 217, 230, 271, 277, 293; beyond, xiv, 21, 79, 118– 19, 272, 294; costs of, 19, 73, 75, 121, 134, 151, 204; violations of, 175 Conoco, double-hull tankers, 206–7 Conservation International, 69, 153, 184, 186, 239–40, 309 consumers, 38, 44, 59, 66, 87–88, 97, 127–31, 136, 142, 150, 161– 62, 211, 216, 240–41, 243, 266, 291, 301 coral reefs, 57, 327 corporate social responsibility (CSR), 14, 16, 21–22, 67–68, 84, 91, 183, 220, 223, 273 Correa, Maria Emilia, 157, 230 Crabtree & Evelyn, 190 cradle to cradle, 195–96 cradle to grave, 54, 73 Credit Suisse, 95 cross-fertilization, 221–22, 233, 250, 261 CSR See corporate social responsibility culture, 22, 29, 68, 107, 179, 192, 256, 272, 278, 281, 295–96 See also Eco-Advantage customers: loyalty of, 29, 115, 124, 242, 244, 300; preferences of, 11, 65–66, 84, 116, 123, 129, 131– 33, 135, 177, 242–43, 250, 253, 301 Cuyahoga River, 42 Daft, Doug, 10, 154, 273 Dahlvig, Anders, 204 DaimlerChrysler, 113 Dasani, 10 See also Coca-Cola data See metrics Davies, Peter, 213, 215 dead zone, 57 decisionmaking, 150, 174, 179, 296; Eco-Advantage, 211, 233, 295 deforestation, 33, 63, 264, 287; clear-cutting, 58, 70; old growth, 58 Dell, 26, 74, 224, 314; Asset Recovery System of, 124–25; catalogs, 85–86, 159; partnership (Electronics Industry Code of Conduct), 190–91; protesters, 70, 98–99; recycling, 70, 125, 159; stakeholder relations, 85–86, 98– 99, 177, 274, 276; trucks, 113; as WaveRider, 25 Dell, Michael, 70, 85, 224, 274 DePree, D J., 164 desertification: China, 60; South Korea, 60 Design for the Environment (DfE), 108, 124, 197–99, 205, 216, 247, 247, 261 See also redesign DeSimone, Livio, 151 DfE See Design for the Environment differentiation: benefits of, 4, 135, 150, 283–84; costs of, 102–3 Digital Age, 17 dioxin, 48 disclosure, 111; Prop 65, 77; PROPER law, 76; “right to know” laws, 77; Sarbanes-Oxley Act, 76–77, 179, 217, 289; Toxics Release Inventory, 76–77, 174 Index disease, 34, 44, 51, 114, 200, 299 Dow Chemical Company, 12, 82, 93, 106, 109, 187, 199, 314; as WaveRider, 25; WRAP, 106 Dow Jones, 24 Dow Jones Sustainability Index, 24, 92, 312 downstream See value chain Dunham, Archie, 207 DuPont, 20, 25, 82, 85, 156, 210– 11, 221, 228, 250, 313–14; Active Energy Leadership Team, 230; CFCs, ozone layer, 56, 121, 265; energy efficiency, 105; Environmental Leadership Council, 206; “goal is zero,” 111, 209, 295; lycra, 177–78, 299; nylon, 177–78; Petra Tech, 125; PFOA, 51; SuperSolids technology, 113; sustainable growth, 141–42, 187; Sustainable Growth Council, 219; Sustainable Growth Excellence Awards, 187, 230; SVA, 177; Toxics Release Inventory, 111, 158; Victoria, Texas, 158–59; as WaveRider, 25 Earth Summit (U.N Conference on Environment and Development), xiii–xiv, 69, 256 Eco-Advantage, 14, 19, 21, 23–24, 27, 29, 113, 120, 123, 141–42, 172, 186, 259–60, 285, 305; culture, 21, 206–33, 270, 295–96; generation of, 22, 32, 61, 75, 82, 101–4, 134, 170, 173, 187, 194, 201, 210, 217, 221, 222, 229, 230, 239, 249, 251, 277, 282, 297, 302, 303; Mindset, 145–65, 186, 266, 271–76; Playing Field, 67, 97; Toolkit, 144, 147–236, 261, 292–96 eco-efficiency, 13, 23, 62, 104, 105– 10, 112–14, 121, 172, 195, 212– 13, 230, 238, 256, 274, 277, 296, 298; Information Age, 19, 109; low-hanging fruit, 108; training, 191; value chain, 113–14, 297, 299 eco-expense, reduction of, 104, 111– 12, 297, 299, 318 eco-isolation, 248–50, 261, 302 eco-labeling, 120, 129–31 See also certification ecomagination, 7, 29; advertising, 7, 122, 138–39; goals of, 7; products, scorecards, 7, 138–39, 228–29 Eco-Management and Audit Scheme (EMAS) See Environmental Management Systems eco-risk control, 104, 114–21, 287, 299–300, 318 ecosystem, 37, 44–47, 52, 287; services, 9, 48 Eco-Tracking, 144, 166–94, 196, 208, 271–72, 282, 285, 293–94 Edward, Garth, 215 EHS See Environment, Health and Safety EHS First See Alcan Electrolux, 119–20, 314; as WaveRider, 25 Electronics Industry Code of Conduct, 190–91 Elkington, John, 192 EMAS See Environmental Management Systems emergency response plan, 80 employees, 29, 90–91, 98, 209, 216– 17, 222, 225, 229–31, 260, 267, 270, 274–75, 278, 291, 296, 303, 305 EMS See Environmental Management Systems endocrine disruptors, 49 end-of-life, 124, 169, 198, 278, 292 energy: 24, 26, 33, 39–42, 55, 60, 287; AUDIO analysis, 62–63; fossil 353 354 Index energy (continued) fuels (coal, gas, oil), 9, 15, 35, 38– 40, 72, 83, 92, 96, 134, 149, 168– 69, 171, 189, 246, 287; policy, 157; regulations, 71, 101, 117; renewable, 7, 9, 11, 15, 21, 22, 40–41, 72, 96, 136, 149, 159, 175, 210, 214, 216, 224, 226, 248, 264–65, 270–71, 290, 300–2 energy efficiency, 7–8, 13, 41, 61, 105–11, 119, 123–24, 133–35, 149, 160, 172, 173, 199–201, 209, 214, 229–31, 237, 293, 298; Life Cycle Analysis (LCA), 173, 252; retrofits, 62, 108–10, 214; solar, 231; supply chain, 176–77, 196, 203 Energy Star, 77, 130, 188, 312 engagement, ownership, 216–20, 261, 272, 282, 295–96 Engen, Travis, 231, 302 Enron, 12 Entropy See Interface Flooring Environment, Health and Safety (EHS), 219–20, 226, 231, 312– 13 environmental aspects, 123, 172, 242–43 Environmental Defense, 58, 69, 71, 186, 270 environmental disasters, 12–13, 80, 82, 88, 181, 206, 259; Bhopal, India, 12, 82; Exxon Valdez oil spill, 13, 80, 88, 181, 206, 259; Love Canal, 80 See also natural disasters environmental footprints, 21, 26, 174, 176, 294 environmental initiatives, failure of, 23, 28, 163, 235, 237–61 environmental leaders: rankings for, 311–12; survey for, 312–13, 315; survey results and list of, 314 environmental lens, 1–4, 10, 14, 18, 107–8, 146–47, 165–66, 197, 217, 222, 235, 266 Environmental Management Systems (EMS), 11, 19, 83, 117, 167, 179, 180, 194, 271–72, 282, 293, 313; Eco-Management and Audit Scheme (EMAS), 180; ISO 14000, 180 environmental missteps, 10, 238 environmental problems, top ten, 32–59, 287 environmental products, 7, 122, 138, 215 Environmental Quality Action Team (EQAT), 217–19 See also Herman Miller environmental strategy, xiv, 5–6, 20– 23, 28, 39, 47, 60–63, 92, 98, 106, 120, 123, 142, 148, 217, 235, 238–39, 247, 263, 273, 283– 85, 313 environmental thinking, xv, 4–5, 10, 10, 14, 23, 27, 28, 32, 92, 95, 108, 128–29, 143–44, 146, 196, 198, 207, 219, 222–23, 229, 248, 252, 262, 269, 271– 72, 277, 295 Environmentally Preferable Products, 78, 129, 199, 244 EPA See U.S Environmental Protection Agency EPR See extended producer responsibility EQAT See Environmental Quality Action Team Equator Principles, 9, 95–96, 291 Ethical Investment Research Service, 92 European Union (EU), 10, 49, 71– 72, 74, 76, 118–20, 180, 188, 289; directives of, 71–74 Evangelical Environmental Network, 88 Index Evergreen lease See Interface Flooring e-waste, 54, 276; WEEE, 73 extended producer responsibility (EPR), 84, 154, 168, 238, 266; take-back laws and, 20, 55, 63, 73, 86, 120, 125, 279 externalities, 216 extinction, 8, 45; of frogs, 46; periods, 45–46 ExxonMobil, 20, 136, 138, 141, 313–14; Exxon Valdez oil spill, 13, 80, 88, 181, 206, 259; global warming, 157 factory gates, outside of, 109, 154– 55, 168, 175, 300 Financial Accounting Standards Board (FASB), 24, 76 FedEx Kinko’s, 230, 248, 314; Environmental Branch of the Year, 224; Paper Working Group, 190; pressure on suppliers, 85, 159; renewable energy, 41, 159, 248; retrofit, energy efficiency, 109; “Six Flags on a Hill,” 250 financial performance, environmental performance v., 26 Fiorina, Carly, 164 fisheries, sustainable, 8, 30, 33, 57– 58, 139, 240, 264, 287 Fitzgerald, Niall, 92, 232 food safety: GMOs, 59, 131, 162, 241; mad cow disease, 114, 299; radiation, 59–60 Ford, 20, 123, 136, 314; Bluewater Network, 140; Conservation International, 239–40; public commitments, 140; Rouge River factory, 237–39; as WaveRider, 25 Ford, Bill, 140, 237–39 Forest Ethics, 85 Forest Stewardship Council (FSC), 68, 130, 203–4 See also certification forestry, 78, 83, 95, 152, 157, 204 Fortune magazine, 31, 55 Fosbury, Dick, 145–47 fossil fuels, 9, 15, 35, 38–40, 72, 83, 92, 96, 149, 189, 287 Frankenstein foods, 162 Friedman, Milton, 14 Friedman, Thomas, 15 Friends of the Earth, 69, 309 FSC See Forest Stewardship Council FTSE4Good, 92, 312 Fuji, disposable cameras and, 246– 47 Gagnier, Dan, 89, 111, 187, 209, 302 Gap, 84, 87–88, 183; suppliers, 84 General Electric (GE), 7, 21, 24, 123, 286; digital cockpit, 180; ecomagination, 7, 29, 122, 138– 39, 228–29; GEnx, 138; Hudson River, PCBs, 91, 122, 162; Industrial Deal Review, risk assessment, 182; PowerSuite, 179–80, 271–72; Session E, 220, 295; water compliance, 91, 122, 162, 180; water infrastructure, 45 General Motors (GM), 123, 314; as WaveRider, 25 genetically modified organisms (GMOs), 59, 131, 162, 241 GHGs See greenhouse gases Gifford, Kathie Lee, 201–2 Global Climate Coalition, 83 Global Environmental Management Initiative, 180, 312 Global Reporting Initiative, 227, 312 global warming, 2, 5, 8, 31, 33–39, 79, 83, 88, 105, 157, 188, 190, 213, 287–88 See also climate change 355 356 Index globalization, 5, 263, 284; flattening, 15; localization, 15 GM See General Motors GMOs See genetically modified organisms “goal is zero,” 111, 209, 295 goals: incremental, 209, 254; stretch, 207–10, 218, 233, 245, 251, 295, 318; symbolic, 209–10, 295 Goldman Sachs, 8–9, 286, 291 Good to Great: Why Some Companies Make the Leap and Others Don’t (Collins), 29, 207, 271 Google, 137, 278 government: federal, 56, 68, 72, 81– 82, 117–18, 157, 188, 191, 249– 50, 265; global, 68, 267; state, local, 1, 12, 44, 65, 68, 72, 78, 89, 153, 183, 201, 267, 290 See also regulations, regulatory green building, 200, 251, 294, 319; LEED, 201, 205 green business, xiv, 23, 134, 238, 297, 307–8, 312; articles and magazines on, 309–10; books on, 307–8 green design, 201, 237, 273 green marketing, 123, 127–29, 132 green markets, 11, 24, 62, 123, 127, 131–32, 240–42 Green Point, 279 Green Power Market Development Group, 290 Green Seal, 300 Green Wave, 8, 13, 15, 289; natural drivers of, 30–64 greenhouse gases (GHGs), 2–3, 60, 210, 312; AUDIO analysis, 264, 270; carbon dioxide, 2–3, 33–36, 39, 76, 105, 175, 246; CFCs, 55– 56, 63, 76, 121, 265, 287, 334; eco-efficiency, 124, 215–16, 245; local pressure, 72; methane, 34– 35, 171–72; Montreal Protocol, 56, 121; nuclear power, 40 Greenlist See SC Johnson Greenpeace, 45, 65–66, 69–70, 136, 190, 258 Green-to-Gold Play(s), 101–42; AUDIO analysis, 264, 270; EcoAdvantage, 143–44, 207, 230, 285, 296, 302; eco-defined new market space as, 133–35, 301; eco-design as, 123–26, 300; ecoefficiency as, 105–10, 124, 215– 16, 245, 297–99; eco-expense reduction as, 111–12, 299; eco-risk control as, 104, 114–21, 299–300; eco-sales and marketing as, 127– 32, 300–1; intangible value as, 135–42, 225, 301; principles and tools for, 317–19; reducing cost and risk through, 105–21; value chain eco-efficiency as, 112–14, 299 greenwashing, 136, 141, 193, 250 GrupoNueva, 256; best practices, 128, 230; lead stabilizers, 157–58; metrics, 178; sales, 128 Haise, Fred, 158 heat wave, 36, 94 heavy metals, 33, 48, 50–51, 61, 120, 175, 198, 264, 287 hedge funds, 96–97 Hefty, 137 Heinz, Star-kist, 84 Henkel, 314; as WaveRider, 25 Hercules, 246–47 Heritage Foundation, 81 Herman Miller, 24, 174, 198, 230, 313–14; culture, 68; Design for the Environment, 198–99; EQAT, 217–19; Green building (LEED, Greenhouse), 201, 251–52, 278, 294; materials database, 176–77; Index Mirra chair, 176–77, 198–99; offgassing, 53; renewable energy, 210, 216; stewardship, 164–65, 295; stretch goals, “Perfect Vision,” 209; wasps, 251–52, 255; waste, 54–55, 111–12, 199–200, 209, 214, 222 Hewlett-Packard (HP), 164, 314; customer questions, 9; flame retardants, 51; paper, 269; partnership (Electronics Industry Code of Conduct), 190; Planet Partners, printer cartridges, 155–56; as WaveRider, 25 Hitachi, 199 Holcim; as WaveRider, 25 Holliday, Chad, 156, 158 Holst, Lex, 148 Home Depot, 291, 314 hormonal agents, 49 HP See Hewlett-Packard Hubbard Hall, 134 Hudson River, 91, 162 Hunter, Dick, 224 hurdle rate, 126, 204, 211–14, 233, 295, 318–19 hurdles, 302–3 hybrid cars, 11, 208, 216; Toyota Prius as, 10–11, 87, 132–34, 222, 239, 242, 301 hydrogen, 40–41, 149, 275 Hyperion Software, 216 Hyundai, 92 IBM, 314; crisis management, 181; greenhouse gas reductions, 106; partnership (Electronics Industry Code of Conduct), 190; regulations, RoHS, 73; supplier audits, 202; as WaveRider, 25 IdleAire, 124 IKEA, 313–15; auditing, 116, 204, 277, 294; Billy Bookcase, 202; cross-fertilization, 221, 250, 295; eco-stores, 271; eWheel, 278; flat packaging, 113–14, 299; fossil fuels, 149; hurdle rate, 204, 212; IWAY, supply chain, 203–4, 224, 277, 294; mantra, the right thing, 163–65; Material Risk Council, 181; metrics, 178, 295; Natural Step, 173; pairing, 214; plastic bag tax, 216; staircase model, 202–4; as WaveRider, 25; wood, forestry, 155–56, 204; World Wildlife Fund partnership, 192 Immelt, Jeff, incentives, 21, 30, 41, 75–76, 78, 144, 207–8, 217, 223–24, 244– 46, 248–49, 261, 273, 295–96, 318–19 India, 10, 15, 148; Bhopal, 12, 82; Coca-Cola, and water issues in, 10, 16, 18, 44–45, 110, 273; middle-class growth in, 16, 40 Indian Institutes of Technology, 81 Indonesia: deforestation, 58, 85; PROPER law in, 76 industrial ecology, 108, 205; closing loops, 190, 199–200; industrial symbiosis, 199–200; Kalundborg, Denmark, 200 inertia, 207, 256, 267, 303 Information Age, 19, 109, 135 innovation, 3–4, 8, 11–12, 21, 49, 75, 82, 105, 107–8, 122–23, 133– 35, 140, 145–47, 160, 177, 207, 209, 210, 251, 278, 283, 285, 290, 294–95, 301, 304 Innovest Strategic Value Advisors, 24 INSEAD, xiv, 335 insurance industry, 9, 38, 66, 92, 94; reinsurance, 38 intangible value, 11, 14, 20, 23, 102–4, 114, 135–42, 154, 214, 233, 276, 295, 297, 301, 319 Integrated Product Policy, 188 357 358 Index Intel, 20, 103, 278, 314; abatement system, 246; Chandler, AZ, 160– 61; community pressure, 161–62; Design for the Environment, designers, 74, 247, 294; hazardous waste, 299–300; Project XL, 188; “strategic term,” 147–48; water use, 160–61; as WaveRider, 25 Interface Flooring, 313–14; ecoefficiency, 110, 131–32; Entropy, 47–48; Evergreen Lease, servicizing, 134–35, 240; renewable energy, 214; shareholders, 228; as WaveRider, 25 Interfaith Center on Corporate Responsibility, 93 International Organization for Standardization (ISO): ISO 9000, 180; ISO 14000, 180 See also Environmental Management Systems International Paper, 20, 85; as WaveRider, 25 Internet, 17–18, 80, 109, 124, 134, 155, 201, 263, 284, 289, 290 investors, 41, 90, 291–92; institutional, 27, 67, 92–93, 119, 267, 291–92; pension fund, 92, 93 Isdell, Neville, 10 ISO See International Organization for Standardization ISO 14000, 180 See also Environmental Management Systems Ivestor, Doug, 10 IWAY See IKEA J & J See Johnson & Johnson Japan, 38, 52–53, 199; Top Runner, 120 Jazz Photo, 246 Johannesburg Earth Summit, xiv, 69 John Deere, 301 Johns Manville, 49 Johnson & Johnson (J & J): renewable energy, 41; Tylenol, 259; as WaveRider, 25 Johnson Controls, 300 JPMorgan, 9, 96, 291 Kaelin, Albin, 110, 198, 216, 231 Kaiser Permanente, 190 Kalundborg, Denmark, 200 Kamprad, Ingvar, 163 Kay, Bob, 163 Kellogg, Terry, 196, 220, 255, 258 Kellogg Company, 84, 114–15 Kerala, India, 10, 16, 18, 44–45, 110, 273 kids, youth, 87–89, 97, 114, 145, 182, 184, 266, 267, 291; Ranger Rick, 88, 184 Kim, Chan, 133 Kingfisher brewery, 16 Kinko’s See FedEx Kinko’s Kistler, Paola, 89 Klamath River, 43 Kleiner Perkins, 41 Koch Industries, 177, 314 Kodak, as WaveRider, 25 Kona Blue, 19 Kranz, Gene, 158 Krueck, Else, 118 kudos See awards Kyoto Protocol, 68, 72, 76, 215, 290 See also climate change Laddychuk, Simon, 231–32 LaFarge, 20, 53, 314; as WaveRider, 25 land use, 22, 33, 45–47, 55, 60, 62, 287 Langert, Bob, 115, 212–13 LCA See Life Cycle Assessment lead, 48, 50, 54, 73, 76, 77, 79, 157; stabilizers, 157 Index leaders, environmental See environmental leaders Leadership in Energy and Environmental Design (LEED), 201, 205 See also green building Lederhausen, Mats, 32 LEED See Leadership in Energy and Environmental Design Levene, Peter, 94 Levi’s: organic cotton and, 139–40, 260 license to grow, 13 license to operate, 12, 44, 153, 161, 257 life cycle, 73, 80, 124, 156, 168, 171, 172, 238, 247, 252, 256, 258, 272, 278; Life Cycle Assessment (LCA), 108, 167–73, 187, 194, 238–39, 261, 266, 293, 299, 304, 318 Lifestyle of Health and Sustainability (LOHAS), 87 Limited Brands: Bath and Body Works, 127; Victoria’s Secret, 58– 59, 85 limits to growth, Ling, Joe, 106 Lloyd’s of London, 94 lobbying, 121, 191, 249, 300, 312 logging, illegal, 48, 58, 78, 85, 96, 155 LOHAS See Lifestyle of Health and Sustainability Long, Dave, 118 long-term actions, 103, 147–50, 209, 228, 235, 270, 276–82 L’Oreal, 51 ´ Love Canal See environmental disasters Lovell, Jim, 158 Lovins, Amory, 134, 199, 273, 308, 309 Lubber, Mindy, 94 magnifying forces, megaforces, 15– 18, 284 Makower, Joel, 139, 140, 307, 310 Marine Stewardship Council (MSC), 30, 130, 240 See also certification market mechanisms: invisible hand, 75–76, 81, 215–16 marketing, green See green marketing materials database, 176–77, 194, 272, 318 Mauborgne, Renee, 133 ´ McDonald’s, 15, 20, 85, 164, 173, 314; antibiotics, 299; branded litter, 163; button batteries, mercury, 114–15, 276; Environmental Defense and, 58, 71, 186; hurdle rate, 212–13; localization, 15; packaging, McNuggets, 252– 55; partnerships, 71, 185–86, 192– 93; recycling, 118, 126; Refrigerants, Naturally!, 190; renewable energy, 214; risk, anticipatory issues management in, 114– 16; suppliers, 176; waste, 58, 163, 243; as WaveRider, 25 McDonough, Bill, 195–96, 198, 237, 273 McLaughlin, Dave, 88, 183–85, 192 McNealy, Scott, 124 Mecklenburg, Sue, 244 Melchett, Lord Peter, 69 Melitta, 127 mercury, 40, 48, 50, 54, 73, 114– 15, 173, 276; fish advisories, 19, 50 Merrill Lynch, 92, 93 Metafore, 190 metrics, 24, 194, 207, 217, 274, 295; data, 21, 167, 173–78, 179, 180, 226, 228, 245, 261, 293, 311–12, 315; ranking of, 86, 315, 359 360 Index metrics (continued) 318–19; Shareholder Value Added, 177; tracking of, 173–76, 272, 293 Microsoft, 20, 81, 178, 190 middle-management squeeze, 244– 46, 248, 261, 303 Millennium Ecosystem Assessment, 31, 43, 45 mindset, 143, 162, 209, 230, 232, 262, 305, 317, 318–19; ecoadvantage, viii, 28, 143–44, 145– 66, 235, 266, 271–76, 282, 285, 292, 296 Mississippi River, 57 Mohin, Tim, 246 Molsen, 131 Monsanto, biotechnology, 131, 162, 241, 314 Montreal Protocol See ozone layer Moore’s Law, 17 Morris, Mike, 227 Mother Jones, 31 Mottershead, Chris, 136–37, 215, 244–45, 300 Moura, Julio, 157 MSC See Marine Stewardship Council Mt Kilimanjaro, 36 Mulcahy, Anne, 91 Munich Re, 38, 94 nanotechnologies, 17 Nathan, Pat, 85 National Association of Evangelicals, 88 National Fish and Wildlife Foundation, 240 National Wildlife Federation, 69 natural capital: planetary balance sheet, 3, 32, 43 natural disasters: costs to society, 38, 78, 94, 288; Hurricane Katrina and, 28, 37, 79 natural forces, top ten, 10, 285–87 See also environmental problems, top ten natural resources, 3, 9, 16, 32, 47, 133, 135, 146, 169, 304 Natural Resources Defense Council (NRDC), 69, 309–10 Natural Step, 173 Nature Conservancy, 69, 309 Nestle, 20 ´ NGOs See non-governmental organizations niche markets, 15, 19, 55, 87, 131– 32 Nickels, Greg, 72 Nike, 11, 85, 112, 164, 190, 202, 209, 314; Power of One, 222; as WaveRider, 25 9/11 attacks See September 11, 2001 attacks nitrogen oxide (NOx), 35, 175, 312 Nokia, 24; green building, 201; lifecycle, 188; materials, 118; takeback program, 55, 120 non-governmental organizations (NGOs), 9, 21, 66, 69–71, 85, 95, 97, 98–99, 116, 153, 227, 258, 273–74, 289–90 See also partnerships Norsk Hydro, 314; as WaveRider, 25 North Atlantic fishery, 57 Northeast Utilities, 232, 274; environmental risk, 181; green cost accounting, 152; violations, water pollution, 223, 227 Novo Nordisk, 200, 314; as WaveRider, 25 Novozymes, as WaveRider, 25 NOx See nitrogen oxide NRDC See Natural Resources Defense Council Office Depot, 131 Ogallala aquifer, 43 Index oil See energy Omland, Jim, 107, 212 organic cotton, 8, 139–40, 241–42, 260 organic food, 52, 59, 62, 84, 87, 127, 129, 187, 231 outsourcing, 15, 263, 283 ozone layer, 8, 10, 33, 55–56, 63, 76, 190, 264–65, 286–87; Montreal Protocol, 56, 121 packaging, 58, 63, 87, 190, 279; clamshell, 71, 186, 254; IKEA, 113–14, 163, 299; McNuggets, 253–55; Timberland shoe box, 106, 130, 213 pairing, 213–15, 233, 318 Paper Working Group, 190, 269, 290 partnerships, 182–94; Chiquita, 70, 129–30, 183–85, 223; communities, 189; experts, 187–88; government, 188; industry, 82–83, 190–92, 240; McDonald’s, 71, 185–86, 192–93; NGOs, 69, 70– 71, 182–86, 192–93, 239–40, 267–68, 278–81, 293; Refrigerants, Naturally!, 190 Patagonia, 314; green products, product pitch of, 241–43; profits of, 25; as WaveRider, 25 Paulson, Rick, 148, 160–61 payoffs, 23, 142, 146–47, 150–54, 165, 292, 318, 319 PBDEs, 49–50 PBT See persistent, bioaccumulative, and toxic PCBs, 122, 162 Pechiney, 231 pension funds, 92–93 perfluorocarbons (PFCs), 246 performance reviews, 224, 233, 244, 272–73 Perrier, 48 persistent, bioaccumulative, and toxic (PBT), 118 Peters, Dierk, 240 Petra Tech, 125 PFCs See perfluorocarbons Pfeiffer, Gary, 228 PFOA, Teflon, 51 Philippines, 78 Philips, 123, 314; as WaveRider, 25 phthalates, 51 pine bark beetle, 37 plaintiff’s bar, 79, 266–67, 289 players, 67–100, 267–68, 285–87, 289; business partners/competitors as, 67, 82–86, 266, 290–91; consumers/community as, 67, 86– 90, 211, 291–92; idea generators/ opinion leaders as, 67, 80–82, 266, 290; investors/risk assessors as, 67, 90–97, 266, 291–92; rulemakers/watchdogs as, 67–79, 266, 289–90 PlayStation See Sony Polluter Pays Principle, 74 pollution, 9, 16, 18, 25, 74, 75–76, 247; air, 22, 31, 33, 40, 48, 52– 53, 57, 63, 108, 151, 161, 168– 69, 170, 175, 238, 246, 287, 293, 312; permits, 22, 112, 257; water, 31, 43, 58, 108, 175, 186, 226, 246, 287 pollution prevention, 53, 76, 106–8, 110–11, 173, 196–97, 212, 224, 298; 3P and, 106–8, 110–11, 212, 298; reduce, reuse, recycle as, 54, 196 See also 3M polyvinyl chloride (PVC), 157, 176, 190, 218, 253, 258 Porter, Michael: competitive advantage, 101, 209, 283, 309; five forces, 98 positioning, 123, 131, 136–37, 139 Post-its See 3M 361 362 Index poverty, 16–17, 22; alleviation of, 22 PowerSuite See General Electric precautionary principle, 49, 74–75 Pressler, Paul, 87–88 price premium, 102, 124, 132–33, 142, 241–42, 261, 303 Prickett, Glenn, 153, 184 Prius hybrid cars See Toyota Procter & Gamble, 20; as WaveRider, 25 product labeling See eco-labeling Project XL, 188 Proposition 65, 77 protectionism, 131 PVC See polyvinyl chloride Q Collection, 19, 198 radiation, 59–60 rainfall patterns, 33, 37–38, 287 Rainforest Action Network, 95 Rainforest Alliance, 70, 129–30, 183–85, 193, 223, 309 Ramsey, Steve, 179 Ranger Rick, 88, 184 Raymond, Lee, 157 REACH See Registration, Evaluation, and Authorization of Chemicals (REACH) recycling, recycled materials, 53–55, 63, 70, 73, 77–78, 85–86, 110, 112, 118, 125, 131, 134–35, 139, 155–56, 163–64, 170, 174– 75, 190, 196–201, 213–14, 240, 246–47, 250, 270–71, 302 redesign, 13, 21, 38, 51, 54–55, 106, 112, 144, 195–205, 294–95, 297, 300; Design for the Environment (DfE), 108, 124, 197–99, 205, 216, 218, 247, 261; process, 200, 204, 237–38; product, 47– 48, 73–74, 101, 104, 123–26, 128, 176–77, 201–5, 213–14, 222, 237–38, 252, 277–78; tools for, 205, 207, 318–19 reduce, reuse, recycle See pollution prevention Reed, Kathy, 107, 110, 128, 151, 221, 223–24 Refrigerants, Naturally!, 190 Registration, Evaluation, and Authorization of Chemicals (REACH), 49, 73–75, 119 See also EU directives regulation, regulatory, 13, 16, 19, 20, 38, 39, 49, 50–51, 53, 55– 56, 71–75, 101–4, 111–12, 116– 21, 151, 179–80, 188, 218, 249, 271–72, 288, 289–90, 299–300 reporting: CSR Report, 84, 88, 185, 225–32, 319; environmental, 183, 227–29 Resources for the Future, 81 Responsible Care, 82–83, 290 Restriction on Hazardous Substances (RoHS), 73 See also EU directives retrofits, 62, 108–10, 214 Revlon, 51 Rhone-Poulenc, 108 Richards, Dave, 153, 257, 275 Ricoh, 314; as WaveRider, 25 right thing to do, 13–14, 163–65 right to know See disclosure Rio Tinto, 314; biodiversity, 45, 47, 152–54, 275; business drivers, 275; Flambeau, WI, 257 risk, reduction/management of, 94, 103–4, 114–21 Rittenhouse, Dawn, 211 River Rouge plant See Ford Robert, Karl-Henrik, 173 Rogero, Larry, 109, 248, 250 Rogers, Jim, 71, 149, 288 Rohner Textil, 24; carbon tax, 216; Climatex fabric, dyes, 197–98; closed-loop water system, 110; Index eco-efficiency, 298; internal education (solar energy), 231; metrics, 176; success/failure of, 255 RoHS See Restriction on Hazardous Substances Rollins, Kevin, 224, 274 Romanoff Flooring, 291 Royal Dutch/Shell See Shell Ruiz, Hector, 219–20 Sarbanes-Oxley Act of 2002, 76– 77, 179, 217, 289 SC Johnson, 314; compensation/bonus, 223; experts, 228; Greenlist, 118–19; toxics, 118; as WaveRider, 25 Scenarios, scenario planning See Shell Schmidheiny, Stephan, xiii, 256, 308 Schneider, Nicole, 221–22 Schnitzer Steel Industries, 55 Schramm, Drew, 218 Schwarzenegger, Arnold, 40 Science, 34 Scientific Certification Systems, 129 Scott, Lee, 7, 13, 28–29, 86 Scully, Vince, 201 sea levels, 33, 36–37, 287 Seabright, Jeff, 10 Securities and Exchange Commission, 76 segmentation, market, 131 September 11, 2001 attacks, 15, 94 servicizing, 134–35, 240 Session E, 220, 245, 295 SFI See Sustainable Forestry Initiative Shapiro, Robert, 162, 241 Shareholder Value Added (SVA), 177 shareholders, 91–94, 228; resolutions and, 28–29, 93–94 Shell, 12, 313–14; assurance letter, 217; Athabasca Oil Sands, 12, 66, 189; brand image, 137, 242; Brent Spar, 65–66, 70, 161, 257, 291; internal trading, 215; metrics, indicators, 223; Pura (VPower), 127–29, 242, 300; SAPREF, 259; scenarios, 12, 116, 148–49, 275; Shell Report, reporting, 148, 228–30; stakeholder relations, 65–66, 189, 257–59, 291; “Tell Shell,” 66, 228; TINA, 12; as WaveRider, 25 shipping, distribution, 7, 38, 46, 48, 62, 74, 113, 166, 168–69, 170, 172, 214, 299 sick building syndrome, 52 Siemens, 314; as WaveRider, 25 Sierra Club, 69, 312 silo thinking, 246–47, 261, 302–3 ski resorts, 38, 70 Social Investment Forum, 91 Socially Responsible Investing (SRI), 91, 267, 274, 311, 315 Sony, 1, 61, 137, 286, 314; PlayStation (Cadmium Crisis), 1–3, 50, 154, 177; as WaveRider, 25 South Korea, 60 SOx See sulfur dioxide sprawl, 12–13, 46–47, 62, 72, 89, 189, 240 SRI See Socially Responsible Investing stakeholders, xv, 8–9, 14; ignoring, 257–58; maps, 97–99, 261, 279– 82; players as five groups of, 66– 68, 289; strategies, 97–99, 279– 82 Stanford Business School, 90 Staples, 173, 314; Fenway Park, 70; Paper Working Group, 59, 190, 269, 290; retrofit, energy savings, 109 363 364 Index Starbucks, 314; coffee cup sleeve, 243–44; Environmental Footprint Team, 219; metrics, 174–75; Mission Review, 225; Paper Working Group, 190; Preferred Supplier Program, 257; renewable energy, 41; as WaveRider, 25 Star-Kist, 84 Statoil, 200 Steel Dynamics, 55 stewardship, environmental, 10, 14, 22, 78, 83, 88, 102–3, 140, 164, 217, 296, 304 Stigson, Bjorn, 191 ă STMicroelectronics, 298; as WaveRider, 25 Stop & Shop, 127 Stora Enso, as WaveRider, 25 storytelling, 225–32, 260, 261, 296, 318–19 strategies: climate, 93, 119; environmental, 3–4, 13, 18, 92, 103, 249, 252, 256 See also Green-toGold Plays stretch goals See goals Styrofoam, 71, 186 sulfur dioxide (SOx), 52, 175, 312 Sun Microsystems, 124 Suncor, 314; as WaveRider, 25 Superfund, 54, 80 SuperSolids technology, 113 supply chain: auditing of, 116–17, 155, 176–77, 186, 190–91, 192– 93, 277, 318; greening of, redesign of, 84–85, 157, 201–5 sustainability, 12–13, 21–22, 24, 53, 57, 84, 90–91, 98, 104, 131, 137, 141–42, 156–57, 162, 173, 178–79, 187, 195, 217, 219, 222, 227–28, 231–32, 241, 250, 253, 302 Sustainable Asset Management, 24, 92, 311 sustainable development, 81, 96, 127, 156, 191, 229 See also World Business Council for Sustainable Development Sustainable Forestry Initiative (SFI), 68 See also certification SVA See Shareholder Value Added Swartz, Jeff, 304 sweatshops, 87, 202 Swigert, Jack, 158 Swiss Re, 38, 94, 314; as WaveRider, 25 take-back laws See extended producer responsibility Tar Sands, 189 Tebo, Paul, 111, 177, 206–7, 210– 11, 221 Teflon, PFOA, 51 terrorism, 15, 59, 94 think tanks, 27, 67, 81, 266, 279, 290 3M, 314; awards, 113, 224; crossfertilization, 221, 250, 295; ecoefficiency, 23, 106–10, 172, 298; Environmental Leadership Award, 224; Environmental Marketing Claims Committee, 226, 251; “15 percent rule,” 207, 278; hurdle rate, 212; innovation, 113, 207; Leadership Development Program (training), 245–46; Lifecycle Management Program, 172; Pollution Prevention Pays (3P), 106– 8, 110, 212, 298; Post-its, 150– 52, 156; solvents (VOCs), 126, 151, 209; as WaveRider, 25 Tide, 41 Tiffany, Timberland: adhesives, 112–13; awards, 224; box redesign of, 106, 130, 196, 213–14; hybrid cars, 216; Life Cycle Assessment, Index boot, 171–72; management responsibility, 220; organic cotton, 242; pairing, 213–14; PVC, 258; renewable energy, 159 time: decisionmaking, 147–50, 292 TIME Inc., 190, 269 TINA, 12 Toshiba, 119 TotalFinaElf, 259 toxics, 8, 18, 48–52, 53–54, 62, 112, 118–19, 151–52, 159, 168– 69, 175, 255, 257, 287, 302; cadmium, 1, 50, 54, 73, 154; lead, 54, 73, 76–77, 79, 157; mercury, 40, 48, 50, 54, 73, 114– 15, 173, 276; Toxics Release Inventory, 76–77, 111, 158, 174 Toyota, 10, 314; advertising of, 242; lobbying, fighting regulations, 249; Paper Working Group, 190, 290; Prius hybrid cars, 10–11, 87, 132–34, 222, 239, 242, 301; stock pickers, 92; stretch goals of, 208; “Toyota Way,” 269; as WaveRider, 25 toys: Button batteries, 114–15, 276; Kellogg’s and mercury in, 114–15; McDonald’s, 114–15, 276 training: executive, 230–32, 245– 46, 250; hard choices, 4, 232, 244, 274 transparency, 17–18, 76, 86, 88, 93, 183, 187, 228, 281, 299 transportation, 35, 38, 41, 47, 82, 210, 217, 219 TRI See toxics, Toxics Release Inventory triple bottom line, 21, 174, 307 Troon North Golf Club, 160–61 trust, Trust Bank and, 115, 141 Twain, Mark, 153 Tylenol scare, 259 U.N Conference on Environment and Development, xiii–xiv U.N Food and Agriculture Organization, 57 Unilever: advisory board, 187; brand positioning, “vitality,” 139; capital investment, 212; concentrated detergent and, 87; executive education and, 232; fish, cod and, 30–31, 57–58, 240; goals of, 208; Marine Stewardship Council and, 30–31, 240; sustainable agriculture, test farms and, 252, 271; water and, 44; as WaveRider, 25 unintended consequences, 126, 251– 52, 261 Union Carbide, 12, 82 United Nations, 31, 41, 92, 190 United Parcel Service (UPS), 113, 314 United Technologies, as WaveRider, 25 UPS See United Parcel Service upstream See value chain U.S Conference of Mayors, 72 U.S Environmental Protection Agency (EPA), xiii, 50, 51, 54, 56, 77, 88, 151, 188, 190, 312–13 value chain, 4, 55, 60–63, 86, 104, 112–14, 116–17, 141, 144, 154– 56, 167–73, 204, 210, 222, 238, 247, 252, 263–66, 293, 299, 318 value innovation, 104, 123, 133, 301 See also innovation values, 10, 14, 20, 25, 90–91, 141, 147, 150, 164–65, 192, 223, 232, 272, 285, 291, 293, 295, 304 Valvidia mill, 44 Victoria’s Secret See Limited Brands Vienna Convention, 56 Vogel, David, 22 365 366 Index volatile organic compounds (VOCs), 107, 151, 161, 169, 175, 209, 287, 312; solvents, 126, 151 Vollbrecht, Gudmond, 155 Walker, Brian, 164, 219 Walking the Talk: the Business Case for Sustainable Development (Holliday, Schmidheiny, and Watts), 156 Wal-Mart, 7, 286, 301; CEO commitment (“Twenty-First Century Leadership”), 7, 28–29; labor practices, 18, 22; partnership, 240; renewable energy, 7, 22, 41, 271; sprawl, Acres for America, 12–13, 47, 240; suppliers, 84 Waste: branded litter, 163; ecoefficiency, 299, 302; hazardous, 54, 80, 116, 154, 158–59, 175, 196, 203, 224, 226, 299, 312; management of, 33, 53–55, 63, 110, 124, 163, 186, 264, 287; solid, 54, 106–7, 175; tipping fees, 54; WRAP, 106 Waste Electrical and Electronic Equipment Directive (WEEE), 73 See also EU directives Waste Reduction Always Pays (WRAP), 106 Watanabe, Katsuaki, 208 watchdogs, 27, 67–79, 90, 97, 227, 266, 289–90 water, 10, 16, 18, 42–45, 62–63, 273; golf courses, 160–61; measurement of and use reduction, 106, 110, 174, 175, 201, 243, 252, 271; oceans and, 30, 33, 37, 43, 57–58, 62–63, 65, 264, 287; Ogallala aquifer and, 43; pollution of, 31, 43, 58, 108, 175, 180, 186, 189, 212, 226, 246, 287; quality of, 42–43, 62, 287; quantity of, 43–45; scarcity, 5, 8, 43, 287; wetlands, 12, 31, 44, 79, 159, 237, 251 Watts, Philip, 308 Wausau Paper, 300 WaveRiders, list of, 25 WEEE See Waste Electrical and Electronic Equipment Directive Weintraub, Mark, 127, 129, 132, 148–49, 189, 229–30 Welch, Jack, 91, 122, 313 Whole Foods, 94, 127 Wille, Chris, 183–85 Winfrey, Oprah, 115–16 win-win outcomes, xiv–xv, 23, 55, 106, 238, 243–44, 254 Woolard, Ed, 111, 158–59, 206 World Business Council for Sustainable Development, xiii, 53, 69, 156, 180, 191, 312 World Economic Forum, 178 World Environment Center, 96 World Resources Institute, 81 World Summit on Sustainable Development, xiv World Trade Center, 201 World Wildlife Fund, 30, 69, 192, 310, 312 W R Grace, 49, 79 WRAP See Waste Reduction Always Pays Xerox, 314; corporate social responsibility, 91; toner cartridges, 55; as WaveRider, 25 Yale University, xiv, 82 Yergin, Dan, 39 Young, Valerie, 152 Zedillo, Ernesto, 178 Zosel, Thomas, 108 .. .Green to Gold Green to Gold How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage Daniel C Esty and Andrew S Winston Yale University Press. .. Data Esty, Daniel C Green to gold : how smart companies use environmental strategy to innovate, create value, and build competitive advantage / Daniel C Esty and Andrew S Winston p cm Includes... deeply about how companies act and are not afraid to pressure them to more But the potential rewards are great too With Green to Gold, we hope to blaze a trail for managers and executives toward stronger